India e-commerce update: Losses, competition, demonetization, writedowns

India e-commerce update: Losses, competition, demonetization, writedowns

- in E-Commerce, Slider
India e-commerce is booming

If you think US e-commerce is competitive, you haven’t seen anything like the India e-commerce market. From heavy losses and intense competition to demonetization and the impact of write-downs on valuation, it’s a shark tank. That hasn’t stopped Amazon and many VCs from, until recently, continuing their investment in e-commerce business. Here’s the latest news from the world’s fastest-growing e-commerce market.

Flipkart, Amazon and Snapdeal’s combined losses in 2015-2016 doubled to total $1.77 billion, nearly equal to the Indian space research budget. How’s this for throwing shade on consumer spending? The Indian government may add a tax on cash payments and cash deposits of more than $440 if its 2017 budget passes. Needless to say, many consumers and businesses are not happy with the prospect. Meanwhile, there’s talk of a push to eliminate debit and credit cards, ATMs and smartphone payments by 2020 when payments could be made by biometrics such as fingerprint or eye scan.

Demonetization and mobile payments are spurring e-commerce as Flipkart and Amazon do battle for biggest  e-commerce site in India. The RedSeer E-tailing Leadership Index ranked Flipkart as most popular e-commerce brand over rivals Amazon, Snapdeal, Paytm and Shopclues. Tiger Global Management, Sequoia and T Rowe Price reduced their valuations of Flipkart and other e-commerce companies as many VCs reduced their investment in the sector as well.

Quartz research shows Indian overseas shoppers spent $8.7 billion on international e-commerce sites in 2016, up 6.7% from 2015. Flipkart plans to launch 40 private label brands in April, hoping to increase profits, compete better with rival Amazon and curry favor with the Indian government’s “Make in India” strategy. Amazon’s Great Indian Sale saw daily sales increases of 200% over average pre-sales days and substantial increases in Tier III cities. Finally, third-party vendors selling doormats with the Indian flag and flip-flops with images of Gandhi, gave Amazon heartburn and created some government affairs challenges, a hasty apology and removal of the products from the e-commerce giant’s site.

ISRO’s Annual Budget Is Even Less Than the Combined Loss of Flipkart, Amazon & Snapdeal in a Year Rs 11,754 crore ($1.77 billion), the combined losses of ecommerce majors Flipkart, Amazon and Snapdeal is almost equal to the annual budget of the Indian Space Research Organisation (ISRO). To put things in perspective, if ISRO was given the same amount, it would be able to launch about 24 ‘Mangalyaan’ missions to Mars.

With the battle intensifying between the top three players in the Indian ecommerce arena, the losses are mounting at an alarming pace. Despite last year’s talks of a course correction by analysts, fuelled by falling investor sentiment, the losses of the Big Three of the Indian ecommerce sector more than doubled in the fiscal year 2015-16.

“Only two sets of people are winning this ecommerce battle. First are the delivery companies and the second, digital marketing companies like Google and Facebook. As the saying goes, in the gold rush the only people who make money are the pickaxe sellers,” says the founder and an expert commentator of a leading consultancy who did not wish to be named. Via

Budget 2017: Government may toughen PAN requirements to Rs 30,000 ( $440) on cash transactions government is considering taking steps to de-incentivise use of cash in the upcoming Union Budget 2017, including levying a charge on cash payments and cash deposits, and bringing more cash transaction under the radar of PAN (permanent account number) tracking, ET Now said on Thursday citing unidentified government sources.

The government may tighten the threshold for quoting PAN on cash transactions to Rs 30,000 ($440) from Rs 50,000 ($734). The threshold may be tightened for merchant transactions too, ET Now said. Currently, cash deposits in banks up to Rs 50,000 are exempt from quoting PAN, while those above Rs 50,000 have to mandatorily furnish PAN card details.

Use of digital wallets and payments banks has indeed surged in India, following demonetization, which sucked out 86% of the currency from circulation, leaving people scrambling for cash to meet their daily needs. Via

India could switch to biometric payments by 2020 head of a government-run policy institute said on Thursday that the country could eliminate the need for credit cards, debit cards and ATMs in the next three years by switching to biometric payments.

Amitabh Kant said that even electronic payment methods may be “totally redundant” by 2020. Instead, all Indians will need for transactions is their thumb or eye.

“Each one of us in India will be a walking ATM,” Kant said at the World Economic Forum in Davos. That would represent “the biggest technological leapfrogging ever in the history of mankind,” he added. Via

India’s Demonetization Is Having A Domino Effect On Credit, E-Commerce wallets are also paving the way for growth in online shopping, which has until now been hampered by “cash on delivery” payment norms. Four out of five Indian smartphone owners under age 35 “window shop” online, according to an eMarketer survey, but just 28% make a purchase at least once a week. Retailers like Alibaba, which is preparing to enter the market, are betting that digital wallets will start to change that behavior.

For Amazon and Flipkart, which have fought for primacy while grappling with India’s transportation infrastructure, e-payments present an opportunity to accelerate sales. Amazon has made significant investments in India and is increasingly well positioned, thanks in large part to the draw of its low prices (and despite some unfortunate cultural stumbles). The company has yet to unveil a proprietary digital wallet for consumers, but recently launched Prime. Via

Flipkart remains most popular e-commerce brand in India: RedSeer report brand recall, better product assortment and lower prices helped Flipkart score over rivals Amazon, Snapdeal, Paytm and Shopclues.

According to the fourth version of the RedSeer E-tailing Leadership Index (ELI), Flipkart (Flipkart Internet Pvt. Ltd) has maintained its lead over rivals such as Amazon India (Amazon Seller Services Pvt. Ltd) and Snapdeal (Jasper Infotech Pvt. Ltd) in the e-commerce rankings with a total score of 97—the same score that it notched up during the last quarter.

While Flipkart and Amazon continue their battle, unicorn payments start-up Paytm proved to be the most improved e-tailer during the period, as the Vijay Shekhar Sharma-led entity continues to ride the post-demonetization wave of digital transactions. Via

E-commerce in India: From Tiger Global to Sequoia, top private equity investors tighten purse strings Global Management isn’t having what one would call a roaring time. Its biggest bet in India— e-retailer Flipkart—posted a loss of R2,306 crore ($346.6 million) in FY16, following it up with a loss of R1,296 crore ($194.8 million) in the nine months to December.

In what seems to be serial downgrading, T Rowe Price last week marked down the shares of Flipkart valuing it at just short of $10 billion. Before that, in November 2016, Morgan Stanley had lowered the valuation by a steep 38% to just $5.54 billion.

Tiger itself hasn’t invested in Flipkart since it last put in $one billion in 2014 along with Naspers, GIC, Accel Partners and others even though the e-retailer is rumoured to be looking to raise money. Indeed, in 2016, Tiger did not invest in its Indian ventures although in 2015, it had put in $2.378 billion, according to Tracxn data. That seems the story across for the e-commerce sector where ventures are not turning profitable as fast as investors were hoping. Via The Financial Express

Indian shoppers turn to overseas e-commerce the growing success of domestic e-commerce platforms, a new PayPal and Ipsos study finds that Indian shoppers are also spending heavily through overseas e-commerce sites, Quartz reports.

In fact, Indian shoppers spent more than $8.7 billion on international e-commerce sites in 2016, a 6.7% increase compared with 2015, the report found.

That amount is still less than the $31 billion domestic e-commerce market, but it shows that Indian shoppers are regularly turning to overseas sites for certain shopping needs. Via

Tech in Asia – Connecting Asia’s startup ecosystem

Flipkart plans private label brandsEcommerce company Flipkart is going to launch a new private label under founder Sachin Bansal’s stewardship, three people directly aware of the company’s plans told Tech in Asia.

India’s Flipkart launched its first self-branded products, dubbed Flipkart Smart Buy, in December, focusing on phone chargers and data cables. The aim is to gain higher margins for the Amazon arch-rival, which in turn could help with profitability.

Internally codenamed Project Ice, Sachin is planning to make self-branded items in more than 40 categories, including electronics and home furnishings. A rollout is expected by April. Via

Amazon Great Indian sale: Tier III cities drove 3-day sale, says e-commerce major

E-commerce major Amazon India saw significant growth in new customer additions in tier III cities like Virudhunagar, Sambalpur and Kolhapur during its 3-day sale that ended today. The India unit of the US-based company said it also saw 200 per cent growth overall between January 20-22 compared to a normal day.

“ saw remarkable new customer growth in tier III cities, including Patiala (1,084 per cent), Virudhunagar (630 per cent), Sambalpur (475 per cent), Kolhapur (400 per cent) among others,” said in a statement.

It added that the daily units sold exceeded Diwali and the New Year sale which saw 200 per cent growth over a usual day. Via

Amazon doormats, flip-flops land e-commerce giant into trouble in India

Amazon India hits in IndiaAmazon’s plans to boost its presence in India where it has budgeted up to $5 billion since its entry in 2013 is running into heavy weather, according to reports in Times of India.

Last Wednesday, India’s foreign minister Sushma Swaraj wasted no time, taking to twitter to issue a warning to the e-commerce giant, when it was brought to her notice that doormats with the image of Indian flag was listed on Amazon Canada.

When the issue seems to have been resolved, now reports have emerged from the US during the weekend that flip-flops bearing the face of India’s founding father Mahatma Gandhi has been listed for sale on Amazon. India’s foreign ministry spokesman Vikas Swarup said that the country’s “ambassador in Washington has been instructed to convey to Amazon that while providing a platform for third-party vendors, they should respect Indian sensitivities and sentiments.” Via

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